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Outward Foreign Direct Investments as a Catalyst of Urban-Regional Income Development? Evidence from the United States

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  • Harald Bathelt
  • Maximilian Buchholz

Abstract

Challenging populist views of outward foreign direct investments (OFDIs) that suggest they move prosperity abroad, this article builds a model suggesting that OFDIs support urban-regional income levels due to (1) labor; (2) knowledge; and (3) multiplier, spillover, and intermediate input effects. In a panel study of median incomes in US urban regions between 2005 and 2013, we first establish a base model that measures income as a function of local factor endowments (high skill levels, fast-growing and technologically sophisticated industries, and urban scale effects). This base model is highly significant. In the next step, we extend this model by adding our main variables of greenfield inward and outward investment intensity, and finally we integrate other indicators that measure the geographic, industrial, and functional composition of OFDIs. While the results for other investment-related indicators are mixed, the main investment variables are highly significant, thus providing strong support that greenfield OFDIs act as a catalyst of urban-regional income development.

Suggested Citation

  • Harald Bathelt & Maximilian Buchholz, 2019. "Outward Foreign Direct Investments as a Catalyst of Urban-Regional Income Development? Evidence from the United States," Economic Geography, Taylor & Francis Journals, vol. 95(5), pages 442-466, October.
    • Handle: RePEc:taf:recgxx:v:95:y:2019:i:5:p:442-466
    DOI: 10.1080/00130095.2019.1665465
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    Citations

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    Cited by:

    1. Luisa Gagliardi & Simona Iammarino & Andrés Rodríguez-Pose, 2021. "Exposure to OFDI and regional labour markets: evidence for routine and non-routine jobs in Great Britain [Who’s got the aces up his sleeve? Functional specialization of cities and entrepreneurship]," Journal of Economic Geography, Oxford University Press, vol. 21(5), pages 783-806.
    2. Maximilian Buchholz & Harald Bathelt & John A. Cantwell, 0. "Income divergence and global connectivity of U.S. urban regions," Journal of International Business Policy, Palgrave Macmillan, vol. 0, pages 1-20.
    3. Buchholz Maximilian & Bathelt Harald, 2021. "Models of Regional Economic Development: Illustrations Using U.S. Data," ZFW – Advances in Economic Geography, De Gruyter, vol. 65(1), pages 28-42, March.
    4. Ascani, Andrea & Bettarelli, Luca & Resmini, Laura & Balland, Pierre-Alexandre, 2020. "Global networks, local specialisation and regional patterns of innovation," Research Policy, Elsevier, vol. 49(8).
    5. Harald Bathelt & Michael Storper, 2022. "Related Variety and Regional Development," Papers in Evolutionary Economic Geography (PEEG) 2214, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Aug 2022.
    6. Maximilian Buchholz & Harald Bathelt & John A. Cantwell, 2020. "Income divergence and global connectivity of U.S. urban regions," Journal of International Business Policy, Palgrave Macmillan, vol. 3(3), pages 229-248, September.
    7. Yang Ruilin & Bathelt Harald, 2023. "How outward FDIs affect income: experiences from Chinese city-regions," ZFW – Advances in Economic Geography, De Gruyter, vol. 67(1), pages 47-64, May.

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